RIN prices rise on growing sentiment that RFS will go unchanged

Houston (Platts)--31Jul2013/512 pm EDT/2112 GMT


Assessments for US biofuels renewable credits, or RINs, were boosted again Wednesday as market talk of US Renewable Fuel Standard reform continued to die off, sources said.

With a growing market sentiment that the federal RFS blending requirements will stand unchanged, corn-based ethanol (D6) RINs for 2013 were traded early and often Wednesday. After being assessed at $1.0250/RIN on Tuesday, 2013 ethanol RINs were first reported traded at $1.05/RIN and rose to levels reported as high as $1.09/RIN.

Ethanol RINs for 2013 were assessed 7 cents higher at $1.0950/RIN, rising for the third time in the last four sessions since plunging 27 cents to $1/RIN Thursday amid rumors of an imminent RFS repeal, sources said.

"There will be zero change in the RFS from Congress," a biofuels RINs broker said. "Big Oil wants it eliminated, and they're not amenable to just modification. RFS elimination will die in Congress."

In a second-quarter earnings call Wednesday, Green Plains Renewable Energy CEO Todd Becker said the recent run-up in RIN prices was a matter of a small number of obligated refiners who were short on RINs. Becker advocated for expanded ethanol blending as a means to resolve the looming "blend wall" issue.

For much of last week, prices trended lower in the aftermath of a two-day hearing in Washington, where members of the House of Representatives' Energy and Commerce Committee held discussions over the RFS and high RIN prices.

Persistent rumors of RFS reform or repeal stemming from the hearings created a selling frenzy that seems to have shifted gears this week, sources said.

EPA has not announced any revisions to 2013 biofuels production targets and some observers think the blend wall could be hit this year. The term describes the point at which the maximum amount of the US gasoline pool has been blended with 10% ethanol. Refiners will then be under pressure to run higher ethanol blends or buy RINs, unless Congress alters the RFS.

The EPA issues a RIN to track renewable fuel usage throughout the supply chain.

Refiners, importers and blenders -- called "obligated parties" -- use them to show the EPA that they have fulfilled their mandated government use of renewable fuels. If the obligated party has not used enough physical product, it can buy RINs to satisfy the quota.

--Jordan Godwin, jordan.godwin@platts.com --Edited by Joshua Mann, joshua.mann@platts.com